Telcos, lobby groups mostly silent on VHA ACCC court action

Hardly any telcos or telecommunications lobby groups are willing to come out in support of Vodafone Hutchison Australia's move to take the ACCC to court over its recent draft decision not to declare mobile roaming, though many were quick to slam the competition regulator when it made the original decision to do so.

A Vodafone Hutchison Australia spokesperson said the company had launched judicial review proceedings against the inquiry process.

When the ACCC announced its draft decision on mobile roaming on 5 May, telcos like MyNetFone were voluble in their criticism. The lobby group ACCAN welcomed the draft decision after previously questioning whether regulated domestic roaming would result in better mobile coverage and improved competition in regional, rural and remote areas.

But this time, both were silent when iTWire sought a reaction. The Competitive Carriers Coalition has not responded to a request for comment either. (Update)

Macquarie Telecom, a member of the CCC, was the only telco willing to make an unequivocal statement.

"The VHA challenge is welcome as it will provide scrutiny of the Commission's process," a Macquarie spokesman told iTWire in response to queries.

He said that in its submissions to this inquiry, Macquarie had strongly urged the ACCC to declare roaming, the third time the regulator has considered the issue.

"Like the market, we were befuddled at the decision. It is clear that Telstra's dominant -- and highly subsidised -- position in mobile markets is entrenching market failure well beyond regional locations.

"Australian mobile markets have simply not developed to give consumers the competitive choice that other countries enjoy. Around the rest of the world, regulated and commercial roaming arrangements are commonplace, MVNOs are thriving participants in the market and enjoy the ability to offer truly differentiated products, and investment is booming."

The spokesman said if the ACCC's action had been consistent with the outcome of the previous inquiry — when it said it chose not to act on the basis that it expected commercial roaming agreements between the mobile networks to settle the issue — it would have stepped in to address the ongoing market failure.'

Damian Kay, who heads medium-sized telecommunications firm Inabox, was in two minds when asked for his company's reaction to the VHA move.

"In one respect, I completely disagree with the ACCC. Allowing domestic roaming would increase competition in regional areas," he said.

"Right now Telstra has a dominance in regional areas. While the actual towns are usually covered it is typically the in-footprint coverage that is the issue, ie, the coverage in between towns. You can get coverage in a town with say VHA but in between towns is the issue and hence why Vodafone wants the domestic roaming to be declared. That makes Telstra and to a lessor degree Optus the only real choice and hence competition is lessened without a third carrier (and to some degree a second carrier) competing for customers.

"We know (anecdotally) that VHA has a strong market share in Sydney metro against Telstra as they have full network coverage. This shows that coverage drives competition. As such I do not understand the ACCC decision. I do not know the process that the ACCC have used but on the surface it seems flawed given what we know in the market albeit anecdotally."

But Kay said there was another angle to the story. "I will say however (and I hate to say it as it gives us less choice) I agree with the result of the ACCC decision. Telstra has invested 100s of millions of dollars in their network to have the widest coverage in Australia and by declaring roaming it effectively penalises Telstra for their investment if other carriers can just piggyback off their investment."

He said that he excluded the government blackspot programme in this discussion.

"If you declare domestic roaming in Australia, I believe it would impact the investment that a carrier like Telstra would make in the network which would ultimately 'hurt' regional customers. Australia is a vast land mass and building coverage is expensive. If you take away one of the key reasons for Telstra to invest in greater coverage then those with poor coverage today will continue to get poor coverage in the future.

"We often question the reasoning behind some of the ACCC decisions around competition (121 NBN POIs is a good example) and this seems to be another case of it."

Kay said that from his own experience, VHA had never been an option as an MVNE as it had more than 430 retail service providers and thousands of direct mid-market customers spread over the country and many in regional areas.

"Therefore we need coverage that VHA cannot offer us. While we use the Telstra 4G and 3G Wholesale Network for our MVNOs, it does not have the same in-footprint coverage as Telstra retail but it is better than VHA and Optus and hence our decision.

"We know that VHA and Optus are both cheaper than Telstra Wholesale for wholesale mobile services (but) we really don't have a choice due to the coverage. A domestic roaming declaration would make our decision of which carrier to partner with more 'interesting'."

VHA was asked whether it did not find this change of tack between the time the roaming draft decision was made and its court action somewhat surprising.

The VHA spokesperson said that iTWire's conclusion on a lack of support was wrong, claiming that TPG had offered support. However, this was just a single line in a report in The Australian, with no elaboration. iTWire has contacted TPG for its reaction.

The spokesperson also said that the Victorian Farmers' Federation had backed VHA. But VFF is a lobby group for farmers, not a telco.

In an op-ed, RMIT network engineering associate professor Mark Gregory pointed out that over more than two decades, Telstra had used billions of dollars of taxpayer funds for mobile cellular infrastructure.

"Infrastructure built using public funds should be made available for the other mobile cellular operators to utilise at fair cost," he said. "Failure to ensure that this occurs is a failure of both the government and the ACCC."

Gregory said Telstra's political posturing was nonsense. "It is time that Telstra looked to the future and new applications and services rather than focusing on its diminishing infrastructure advantage," he said.

"If Telstra was to put on hold mobile cellular infrastructure investment in regional and remote areas, Telstra would be giving competitors, who will not stop building infrastructure where potential customer numbers justify investment, an opportunity to reduce Telstra’s mobile footprint advantage."

Update: The CCC said it strongly urged the ACCC to declare roaming in this inquiry, the third time the regulator had considered the issue.

In response to iTWire's query, a CCC spokesperson said: “If the Commission had acted consistently with the outcome of the previous inquiry – when the Commission chose not to act on the basis that it expected commercial roaming agreements between the mobile networks to settle the issue – it would have stepped in to address the market failure.

“That it did not means Australia remains out of step with the rest of the world, and that mobile market dysfunction continues to corrupt downstream and adjacent communications markets. This is clearly costing all Australians.

“The VHA challenge is welcome as it will provide scrutiny of the Commission’s process.”

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Sam Varghese has been writing for iTWire since 2006, a year after the sitecame into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.